State will appeal the London decision on swaps contracts – publico

                 

                         
                     

                 

 
 

The Ministry of Finance announced on Tuesday that public companies will appeal the decision of the Commercial Court in London on the dispute that opposes the Banco Santander Totta (BST). The funds will be provided by the companies involved:. Lisbon Metro, Carris, Metro do Porto and Transport Company Collective Port

In a statement, the Ministry of Finance points out that “the Court of London understand that if Portuguese law were applicable to the swaps , seven of the nine contracts would have to be modified or cease made with a view to a fair solution for both parties to the dispute. ” Finance, confirming the advanced information in the early afternoon by Observer , remember that “the court found arguments justifiable both on the bench as the side of the transport companies” and that the court “decided legal issues “, but that the decision” allows the parties to continue to resolve the difficult existing disputes between them. “

as the PUBLIC had reported, so that the state can that swaps are analyzed based on Portuguese law, companies will have to appeal the judgment by invoking the Rome Convention.

This convention provides that a contract “domestic” signed between Portuguese, can not be ruled out the mandatory rules of national law. That is, even if agreed between the parties that the jurisdiction and applicable law are in another country, the Portuguese rules can not fail to be considered.

In the judgment of the Commercial British Court, “the conclusion of court is that Art. 3 of the Rome Convention does not apply because all elements relevant to the situation at the time of choice [swaps] were not only linked to Portugal. In short, there are purely domestic contracts. “

The London decision states that” by applying the rule of the article 437 of the Civil Code [Portuguese], the court accepted his argument that the global financial crisis is an “abnormal change of circumstances’ that occurred since signed swaps between 2005 and 2007″. Moreover, “the court accepts the argument of the transport companies that, in the case of these swaps in the unprecedented behavior of interest rates was inflated by snowball structures, there was a profound change in macroeconomic conditions compared to those that existed when they took the decision to subscribe. “

in a statement Tuesday, the Ministry of Finance says that the” result of a very prolonged period of low interest rates, above all occurred since 2009, “the so-called snowball spreads “were triggered in seven” contracts, leading to transport companies “were required, as of 1 October 2015, the payment of interest rates between 20% and 70%.”

In the ruling, the judge found that public companies were aware of the risk that these contracts implied and their managers had the expertise to negotiate with the bank. Despite concluding that not signed with a speculative intention, but rather in order to contain the escalation of debt, the British court upheld the financial institution, dismissing the argument that these swaps are “gambling”.

the process of Santander against public companies emerged following the previous decision Minister of Finance, Maria luís Albuquerque to suspend payments contractually due under the respective contracts (signed during the first government of José Sócrates). In the process, the bank asked that the companies were ordered to pay about 272 million euros, which accrue interest at since October 2015. As for the potential losses were at about 1500 million, related to the maturity of the contracts , occurring within about 15 years. The amount spent by the state in the case of swaps now will almost ten million euros and the bill, with the now advertised feature, you should not be here.

Contacted by PUBLIC, Santander did not make any review the appeal notice by the state.